30 December 2011

Southern India Accumulates 40 Percent of Overall Gold Demand

This year, South India has once again proven to be the highest buyer in gold resources maintaining a continuous track record including the previous year. This has given a boost in the share of nation's capital. According to the recent report by Karvy Private Wealth,four Southern states witnessed a significant rise in gold consumption which accumulated more than 40 percent out of the total gold purchase in India.

The ETF (Exchange Traded Fund) commodity gold investment has reached to a significant hike of 150 percent amounting to 2,440 crore, throughout the last year while gold value has increased to reach around 27 percent compared to the previous year. According to the report, gold consumption in the eastern region is 10-15 percent, for western region, it is approximately 25-30 percent while northern region is reported to be around 20-25 percent of gold consumption.

Amongst the Southern states, Tamil Nadu is the leading state with the highest gold consumption. Gold showrooms have been cropping up rapidly in recent years and this has contributed to the increased usage of gold and high gold consumption among people. According to the gold dealers, this is primarily due to the fact that the tradition of gold purchasing is a common phenomenon and followed by many, and in the other way, it serves as a customary way of investment.

Anantha Padmanabhan,MD of Chennai-based GRT Jewellers said, "Traditionally, gold has been selling well in Tamil Nadu. In addition, it is increasingly accepted as a good investment." However towns such as Coimbatore, Madurai, Trichy and Salem are the important places which provide markets for gold consumption.

Amjad Hussain, Regional Director of Malabar Gold said, "We have 25 showrooms in Kerala and now we will like focus on Tamil Nadu and Andhra Pradesh as these states offer good potential."

B Girirajan,MD of Bhima Jewellers said, "The low VAT of 1-2 percent on gold in three states except Kerala has also helped in promoting sales. In Kerala, the VAT is 4percent and a reduction could lift the sales further."

According to the India Wealth Report of Karvy, Indians are known to possess a total of approximately 18,000 tonnes worth 50 lakh Crore. Out of the total Indian gold demand, gold jewelry contributes to around 75 percent. Gold investment has gone up by 23 percent, however the amount of gold purchase is somewhat low, at 0.40 grams, as per the India Wealth Report.